LEGISLATIVE SUMMARY
The June 5th deadline for bills to pass their house of origin has expired, thus providing a much clearer picture of the employment bills to potentially consider in 2015. Not unexpectedly, a number of bills survived this initial hurdle, including bills that would:
- Increase California’s minimum wage to $11.00 per hour in January 2016 (rather than to $10.00 as currently scheduled), and to $13.00 per hour by 2017 (SB 3);
- Target gender-based wage differentials, including by preventing employers from obtaining or releasing salary history information (AB 1017 and SB 358);
- Expand the California Family Rights Act to apply to employers with more than twenty-five employees (instead of 50) and expand the class of family members for whom leave may be taken because of a serious health condition (SB 406);
- Allow employees to take time-off for “childcare or school emergencies” (SB 579);
- Prohibit advertisements discouraging the unemployed or public employees from applying (AB 676 and AB 883);
- Allow employers to provide a preference to veterans during hiring decisions (AB 1383);
- Amend the Fair Employment and Housing Act (FEHA) to treat accommodation requests as protected legal activities for retaliation purposes (AB 987); and
- Preclude employers from requiring that employees agree to arbitration as a condition of employment (AB 465).
Given the overwhelming single party rule in Sacramento, most of these bills have a significant likelihood of making it to Governor Jerry Brown’s desk.
Since many provisions of California’s Paid Sick Leave law (AB 1522) are scheduled to take effect July 1, 2015, a particularly interesting bill is AB 304, which would amend the Paid Sick Leave law in multiple respects, including permissible accrual methods. Perhaps recognizing the practical problems of having these alleged clarifying amendments take effect on January 1, 2016, six months after the Paid Sick Leave law takes effect, AB 304 has recently been amended to deem it urgency legislation to take effect immediately upon the Governor’s signature. Whether such urgency legislation can attract the requisite two-thirds support in both chambers, or whether these realities may result in a brief delay of the Paid Sick Leave law’s effective date (as in Massachusetts) remains to be seen.
There were also several significant employment bills that failed passage, including bills that would have required employers provide “double pay” on Thanksgiving and Christmas (AB 67) and would have required food and retail establishments to provide two weeks notice of schedules or pay additional compensation (AB 357).
Listed below, and largely by subject matter, are the key employment bills of potential general application that remain pending, followed by a brief discussion of the employment bills that failed passage, but may be reconsidered in 2016.
PENDING BILLS
Additional Minimum Wage Increase (SB 3)
Even though California’s minimum wage is already scheduled to increase to $10.00 per hour on January 1, 2016, SB 3 proposes several additional increases. Specifically, California’s minimum wage would increase to $11.00 per hour on January 1, 2016, and to $13.00 per hour on July 1, 2017. After January 1, 2019, the minimum wage would also be annually adjusted based on the California Consumer Price Index (CPI) and rounded to the nearest five cents. This bill also provides that it would not preclude the Industrial Welfare Commission (IWC) from increasing the minimum wage beyond that required by the CPI formula, but would preclude the IWC from adjusting it downwards even if the CPI was negative for the preceding year.
Status: SB 3 passed the Senate along a party-line vote and is pending in the Assembly but has not yet been referred to a committee. While California overwhelmingly approved a two-step minimum wage increase in 2013 (AB 10), that increase had specifically omitted annual CPI-based increases, and a very similar bill to SB 3 (SB 935) stalled last year.
(As a reminder, San Francisco’s minimum wage increased to $12.25 per hour on May 1, 2015, and will increase to $15.00 per hour by 2018, while Los Angeles recently voted to increase its minimum wage to $15.00 per hour by 2020.)
Paid Sick Leave Amendments (AB 304)
This bill states it is intended to “clarify” several provisions of last year’s Paid Sick Leave law (AB 1522), for which a number of substantive provisions are scheduled to take effect July 1, 2015. For instance, while Labor Code section 246 currently provides that an employee need only work 30 or more days in California to be eligible, it does not specify whether this work must be performed for the same employer. Accordingly, this bill would specify that the employee must work 30 or more days “for the same employer” to be eligible.
It would also attempt to address employer concerns that the statutorily-enumerated accrual method of “one hour for every 30 hours worked” (section 246(b)) conflicts with existing methods by which employers currently provide paid sick leave, but the attempted fix may be controversial. For instance, it would amend section 246(b) to specifically authorize employers to use a different accrual method other than providing one hour for every 30 hours worked. Proposed subsection (b)(3) would allow an employer to utilize a different accrual method, provided the accrual is on a regular basis so that the employee has no less than 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment, or each calendar year, or each 12-month basis.
Alternatively, proposed subsection (b)(4) would specify that an employer may satisfy the accrual requirements of this section by providing not less than 24 hours or three days of paid sick leave that is available to the employee to use by completion of his or her 120th calendar day of employment.
However, some concern has been expressed that by requiring the employer to provide at least the statutorily-required minimums (i.e., 24 hours/3 days) by the 120th day, employers may still be in violation if their current policies do not do so even if they otherwise provide for more than 24 hours or 3 days of paid sick leave in a year. Thus, a concern is that rather than providing an alternative mechanism reflective of more generous employer policies, the “by the 120th calendar day” requirement may statutorily invalidate these otherwise more generous policies.
While Labor Code section 246(d) currently specifies that no accrual or carryover is required if the employer provides the full amount of leave at the “beginning of each year,” it does not specify how “each year” is determined nor does it contain the language in other subsections allowing an employer to use a “calendar year, year of employment or 12-month basis.” AB 304 would cure this discrepancy and specify that no accrual or carryover is required if the employer provides the full amount of leave “at the beginning of each calendar year, year of employment or 12-month basis.” It also would specify that “full amount of leave” means three days or 24 hours.
The bill also amends section 246(e), which presently relieves an employer from providing additional paid sick leave if it has a paid sick leave or paid time off (PTO) policy that may be used for the same purposes and under the same conditions as the paid sick leave required under AB 1522, and meets one of two requirements: (1) it satisfies the accrual, carry-over and use requirements of section 246; or (2) it provides no less than 24 hours or three days of paid sick leave or PTO for each year of employment, calendar year or 12-month basis. This bill would amend this second basis and require the employer provide the 24-hours or three days of paid sick leave “at the beginning” of each year of employment, calendar year or 12-month basis.
Labor Code section 246(f)(2) presently states that an employer need not pay out unused sick time upon separation but must reinstate any prior balances if rehired within one year. This bill clarifies an employer need not reinstate accrued sick leave that was previously paid out upon cessation of employment. It would also amend this section to clarify that any reinstated balances would be “subject to the use and accrual limitations” of this section, meaning the employee would still have to satisfy any remaining portion of the 90-day period before usage, and could not exceed the accrual amounts for the year in which the employee is re-hired.
Labor Code section 246(h) presently requires employers to provide written notice to employees of available paid sick leave balances, either through the itemized wage statements required under Labor Code section 226 or a separate writing provided on the designated pay date. Responding to employer concerns about how to track balances and provide these notices if the employer provides “unlimited” paid sick time, this bill would specify that an employer may satisfy this notice obligation by indicating “unlimited” on the notice or wage statement. For employers in the broadcasting and motion picture industries, AB 304 would delay this requirement of identifying sick leave balances on wage statements or other written notices until January 21, 2016.
Labor Code section 246(k) presently states that paid sick leave shall be paid at the employee’s hourly wage, but articulates a very confusing formula for determining this rate if the employee has received different hourly rates in the preceding 90 days before paid sick leave is used. AB 304 deletes this formula, and for non-exempt employees would instead provide that paid sick time “shall be calculated in the same manner as the regular rate of pay for the workweek in which the employee uses paid sick time, whether or not the employee actually works overtime in that workweek.” For exempt employees, paid sick time “shall be calculated in the same manner as the employer calculates wages for other forms of paid leave time.”
While section 247.5 requires employers to document the paid sick days accrued and used by an employee for three years, this bill would also add language providing that an employer is not obligated to inquire into or record the purpose for which an employee uses paid leave or paid time off.
This bill would slightly expand the otherwise narrow exemptions from this paid sick leave mandate set forth in section 245.5(a). For instance, in addition to the four current exemptions, it would also exempt a retired annuitant of a public entity and a worker covered by the Railroad Unemployment Insurance Act. (A bill that would have amended section 245.5(a) to remove the current exemption for in-home support workers (AB 11) stalled during this legislative session).
Lastly, it would add a provision specifying that the Paid Sick Leave law’s provisions are severable, such that if any are deemed invalid they will not affect the other provisions.
Status: This bill passed the Assembly’s Labor and Employment and Appropriations committees, but has not yet passed the Assembly. However, it was recently amended to identify itself as an urgency bill, meaning that although passage now requires a two-thirds vote (rather than a majority), it is not subject to the normal timing rules and would take effect immediately upon being signed by the Governor.
Cheerleaders to be Considered Employees of Professional Sports Teams (AB 202)
There have recently been several high-profile wage and hour class actions filed by cheerleaders or dance teams of professional sports franchises. This bill would add new Labor Code section 2754 to provide that for purposes of state law governing employment, including the Labor Code, the Unemployment Insurance Code and the FEHA, a cheerleader utilized by a California-based professional sports team, directly or through a labor contractor, will be deemed an employee. The professional sports team will also be required to ensure the cheerleader is classified and treated as an employee, thus preventing them from being treated as independent contractors.
Cheerleader will be defined as “an individual who performs acrobatics, dance, or gymnastic exercises on a recurring basis, but will not include individuals utilized no more than one time in a calendar year.” “Professional sports teams” will be defined as teams at either a minor or major league level for baseball, basketball, football, ice hockey or soccer.
Status: This bill passed the Assembly along a largely party-line vote and is pending in the Senate’s Labor and Industrial Relations committee.
Arbitration Agreements Targeted (AB 465)
This bill would create a new Labor Code section (section 925) to provide that any waiver of rights, penalties, remedies, forums and procedures established by the Labor Code, including the right to file a claim with the Labor Commissioner or a civil action in court, may not be required as a condition of employment. It would also require that any such waiver be knowing and voluntary, in writing, expressly not made as a condition of employment, and require the party seeking to enforce the waiver to prove that it was made voluntarily and knowingly and not as a condition of employment. Otherwise, any such waiver will be deemed involuntary, unconscionable, against public policy and unenforceable.
It would further prohibit employers from threatening, retaliating or discriminating against any person who refuses to waive such rights, and, in addition to any other legal remedy, would impose a civil penalty of up to $10,000 per each individual for each violation of this section, plus reasonable attorney’s fees.
This bill would apply to any such waivers, including private arbitration agreements, entered into, altered, modified, renewed or extended on or after January 1, 2016.
Status: This bill narrowly passed the Assembly despite bi-partisan opposition, and is presently pending in the Senate’s Labor and Industrial Relations Committee. Although loosely modeled on a similar bill that was enacted last year (AB 2617 [imposing limits on contractual waivers regarding the Unruh Act]), even if enacted, AB 465 will almost certain face judicial challenge on the grounds it conflicts with the Federal Arbitration Act.
Expanded Labor Commissioner Enforcement Powers (AB 970)
This bill would amend several Labor Code provisions to expand the citation authority of the Labor Commissioner. For instance, while Labor Code section 558 presently authorizes the Labor Commissioner to investigate Labor Code or Industrial Welfare Commission (IWC) orders regarding wages, this bill would also authorize the Labor Commissioner to issue a citation for violations of applicable “local” overtime laws. Similarly, it would amend Labor Code sections 1197 and 1197.1, which presently authorize the Labor Commissioner to investigate violations of the minimum wage set by the IWC to issue a citation for violations of any state or local minimum wage laws.
This bill would also amend Labor Code section 2802 to authorize the Labor Commissioner to issue citations and penalties against employers who fail to properly indemnify employees for expenses incurred in employment.
Status: This bill passed the Assembly, and is pending in the Senate’s Labor and Industrial Relations Committee.
Amendments to the Family-School Partnership Act and to Kin Care Leave (SB 579)
This bill expands the reasons for which an employee may take job-protected leave under the Family School Partnership Act, codified at Labor Code section 230.8. Presently, section 230.8 requires employers with 25 or more employees to allow employees to use up to 40 hours of unpaid time (limited to eight hours in any calendar month) to participate in school or childcare related activities. This bill would expand this provision to also allow employees to take job-protected time off to find, enroll or reenroll their children in a school or with a licensed child care provider. More significantly, it would also allow employees to take time off to address a “child care provider or school emergency.” New subsection (e) would define this as meaning a child cannot remain in a school or with a child care provider due to one of the following: (a) the school or child care provider has requested the child be picked up, or it has an attendance policy (excluding planned holidays) that prohibits the child from attending or requires the child be picked up; (b) behavioral or discipline problems; (c) closure or unexpected unavailability of the school or child care provider, excluding planned holidays; or (d) a natural disaster, including but not limited to, fire, earthquake or flood.
While section 230.8 presently provides such job-protected leave to parents, guardians and grandparents, this bill would extend these protections to stepparents, foster parents or an employee who stands in loco parentis to a child.
This bill would also amend California’s “kin care” provision (Labor Code section 233), which requires employers to allow employees to use one-half of their accrued sick leave to care for a “family member” (as defined), to permit an employee to use sick leave for the purposes specified in the Paid Sick Leave law (Labor Code section 245 et seq.). In other words, rather than attempting to copy over a number of the Paid Sick Leave law’s provisions and definitions into the kin care law, this much simpler approach would modify the kin care law to specify that its definition of “family member” and grounds for sick leave is consistent with the Paid Sick Leave law.
Status: This bill almost unanimously passed the Senate, and is pending in the Assembly and will soon be referred to a committee. It appears to be largely unopposed with bipartisan support so likely will pass the Assembly.
Expansions to the California Family Rights Act (SB 406)
This bill proposes to materially expand the number of employers subject to California’s Family Rights Act (CFRA, Gov. Code section 12945.2 et seq.), and to expand the bases for employee leave, thus potentially creating further differences between CFRA and the federal Family Medical Leave Act (FMLA). For instance, while CFRA presently defines “employer” as a person employing 50 or more employees, this bill would redefine employer to include any person employing 25 or more persons. Similarly, while CFRA presently authorizes even covered employers (i.e., 50 or more employees) to deny a qualifying leave if the employer has less than 50 employees within 75 miles of the employee’s worksite, this bill would restrict this small employer exemption to employers that employ fewer than 25 employees within 75 miles of the employee’s worksite.
This bill would also alter the definitions regarding the circumstances for which CFRA leave may be taken. For example, it would expand the definition of “child” to include children of a domestic partner or for persons to whom the employee stands in loco parentis, and would remove the current age (i.e., under 18 years old) and dependent status restrictions. If adopted, CFRA leave would be permitted for the serious health condition of a “child,” as defined, regardless of age and for adult children regardless of whether that child is dependent upon the employee. It would also expand the definition of “parent” to include “parents-in-law.”
While CFRA presently authorizes employees to take leave for the serious health condition of a child, parent or spouse, this bill would expand this entitlement to include leaves for the serious health condition of a grandparent, grandchild, sibling or domestic partner.
Lastly, presently under Government Code section 12945.2(q), where both parents are employed by the same employer, the employer may limit their combined leave rights in connection with the birth, adoption or foster care placement of a child to 12 weeks. This bill would delete this subsection in its entirety, suggesting both employees employed by the same employer would each be entitled to 12 weeks of leave, assuming they are otherwise eligible. As a reminder, although completely deleting this aggregation ability would create a material difference between CFRA and FMLA (since FMLA would still permit aggregation), these two statutes already currently differ in that FMLA permits aggregation only if both the “husband and wife” work for the same employer, while CFRA permits aggregation where both parents (whether married or not) work for the same employer.
Status: This bill passed the Senate along a party-line vote, and is pending in the Assembly and will soon be referred to a committee.
Extension of California’s Paid Family Leave Benefit from 6 to 10 Weeks (AB 908)
Under California’s family temporary disability insurance program, employees may receive up to 6 weeks of wage replacement benefits when taking time off work to care for specified persons (e.g., child, spouse, parent, etc.) or to bond with a minor child within one year of the birth or placement of the child in connection with foster care or adoption. This bill would amend Insurance Code section 3301 to allow employees to receive up to ten weeks of wage replacement benefits, rather than six. It would also modify the formula for calculating these benefits to ensure a minimum weekly benefit of $250, and to increase the wage replacement rate from the current 55% to either 65%, 75% or 80% depending on an individual’s wage level.
Status: This bill passed the Assembly with bipartisan support and by a wide-margin, and is now pending in the Senate and will soon be referred to a committee.
Equal Pay Act Amendments (SB 358)
Echoing the Paycheck Fairness Act (S. 84) pending at the federal level, this bill proposes to amend California’s Equal Pay Act to target gender-based wage gaps.
For instance, Labor Code section 1197.5 presently prohibits employers from paying less to members of the opposite sex who perform equal work in the same establishment. This bill would eliminate the “same establishment” requirement, and revise the “equal work” requirement to instead prohibit paying less for “substantially similar work, when viewed as a composite of skill, effort and responsibility” performed under similar working conditions.
It would also amend the statutorily-enumerated exceptions in section 1197.5, which presently are a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or a differential based on any bona fide factor other than sex. Specifically, while it would retain the first three exceptions, it would significantly revise the “bona fide factor” to require the employer to prove that a wage-differential is not based on or derived from a sex-based differential and is consistent with a “business necessity,” such as a difference in education, training or experience that is job-related with the position in question. It would also specify that “business necessity” means “an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purposes it is supposed to serve.” However, this bill would also provide that this defense shall not apply if the employee demonstrates that an alternative employment practice exists that would serve the same business purpose without producing the wage differential.
In addition to demonstrating at least one of those factors, the employer must also satisfy two new criteria: (a) that each factor relied upon is applied reasonably; and (b) the one or more factors relied upon accounts for the entire wage difference.
This bill would also amend section 1197.5(d) to expand from two years to three years an employer’s obligation to retain records of the wages and wage rates, job classifications and other terms and conditions of employment for employees.
This bill would also add new subsection (j) to prohibit employers from discharging, or in any way discriminating or retaliating against, any employee who takes action to invoke or assist in any manner the enforcement of California’s Equal Pay Act. Under this new subsection, employers would also not be able to prohibit an employee from discussing the employee’s own wages, discussing the wages of others, or inquiring about another employee’s wages, or aiding or encouraging any other employee to exercise his or her rights under this section.
The bill would extend the existing enforcement mechanisms for wage discrimination to claims for retaliation and would provide a one-year statute of limitations for retaliation claims. In addition to Labor Commissioner enforcement, this bill would also authorize an employee who has been discharged, discriminated or retaliated against to pursue a civil action for reinstatement and reimbursement of lost wages, and would require that such civil actions be commenced no later than one-year after the cause of action accrues.
Status: This bill unanimously passed the Senate, and is pending in the Assembly and will soon be referred to a committee. It appears to be unopposed and thus likely to also pass the Assembly.
Limits on Salary-Related Discussion during Hiring Process (AB 1017)
Citing a concern that prior salary history information perpetuates gender-based inequality, this bill would impose new limits on an employer’s ability to obtain salary history information. Specifically, this bill would enact new Labor Code section 432.3 and prohibit employers from seeking salary history information, including compensation and benefits, from an applicant for employment during an interview or as a condition of employment. It would also prohibit an employer from releasing the salary history of any current or former employee to any prospective employer without written authorization from the current or former employee.
Status: This bill narrowly passed the Assembly despite bipartisan opposition, and is pending in the Senate’s Labor and Industrial Relations committee.
Equal Pay Certifications for Certain State Contractors (AB 1354)
Entitled the Equal Pay for Equal Work Act of 2015, AB 1354 would amend Government Code section 12990, which presently identifies criteria for employers who wish to become a contractor for public works, including agreeing to California’s non-discrimination laws and submitting a non-discrimination program to the Department of Fair Employment and Housing (DFEH) for approval and certification. This bill would require employers with more than 100 employees, prior to becoming a contractor or subcontractor with the state, to submit a nondiscrimination to the DFEH, and to submit periodic reports of its compliance with that program. Employers with fewer than 100 employees may also be required to submit a non-discrimination program, and if so, would be required to comply with the same requirements applicable to employers with more than 100 employees. The DFEH would be allowed to require approval and certification of the nondiscrimination program and to audit programs for compliance.
The nondiscrimination program would need to include policies and procedures designed to ensure equal employment opportunities for all applicants and employees, an analysis of employment selection p